Subject:
Effectiveness of the Social Security Administration’s Death Termination Process
(A-09-02-22023)

The attached
final report presents the results of our audit. Our objective was to evaluate
(1) the effectiveness of the Social Security Administration’s controls
and procedures for resolving death alerts and recovering payments after the
death of a beneficiary, and (2) the timeliness of death reporting by State
agencies.

Please comment
within 60 days from the date of this memorandum on corrective action taken or
planned on each recommendation. If you wish to discuss the final report, please
call me or have your staff contact Steven L. Schaeffer, Assistant Inspector
General for Audit, at (410) 965-9700.

James G. Huse, Jr.

OFFICE
OF

THE
INSPECTOR GENERAL

SOCIAL
SECURITY ADMINISTRATION

EFFECTIVENESS
OF THE

SOCIAL
SECURITY ADMINISTRATION’S

DEATH
TERMINATION PROCESS

September
2002

A-09-02-22023

AUDIT
REPORT

Mission

We improve
SSA programs and operations and protect them against fraud, waste, and abuse
by conducting independent and objective audits, evaluations, and investigations.
We provide timely, useful, and reliable information and advice to Administration
officials, the Congress, and the public.

Authority

The Inspector
General Act created independent audit and investigative units, called the Office
of Inspector General (OIG). The mission of the OIG, as spelled out in the Act,
is to:

Conduct
and supervise independent and objective audits and investigations relating
to agency programs and operations.

Promote
economy, effectiveness, and efficiency within the agency.

Prevent
and detect fraud, waste, and abuse in agency programs and operations.

Review
and make recommendations regarding existing and proposed legislation and
regulations relating to agency programs and operations.

Keep
the agency head and the Congress fully and currently informed of problems
in agency programs and operations.

To ensure
objectivity, the IG Act empowers the IG with:

Independence
to determine what reviews to perform.

Access
to all information necessary for the reviews.

Authority
to publish findings and recommendations based on the reviews.

Vision

By conducting
independent and objective audits, investigations, and evaluations, we are agents
of positive change striving for continuous improvement in the Social Security
Administration's programs, operations, and management and in our own office.

Executive
Summary

OBJECTIVE

Our objective
was to evaluate (1) the effectiveness of the Social Security Administration’s
(SSA) controls and procedures for resolving death alerts and recovering payments
after the death of a beneficiary, and (2) the timeliness of death reporting
by State agencies.

SSA’s Death
Alert, Control, and Update System (DACUS) receives death reports from Federal
and State agencies and compares the date of death to its payment records. If
payments have been made after death, DACUS generates an alert. SSA’s procedures
state that field offices (FO) should resolve death alerts within 30 days
to minimize incorrect payments. To recover payments after death, SSA works with
the Department of the Treasury (Treasury) to initiate the reclamation process
and collect any outstanding amounts owed to the Agency.

In September 1999,
SSA contracted with the National Association for Public Health Statistics and
Information Systems (NAPHSIS) to develop standards and guidelines for a nationwide
system of electronic death registration (EDR). Under EDR, SSA verifies the Social
Security number (SSN) with the State bureaus of vital statistics at the beginning
of the death registration process, thereby allowing the Agency to take immediate
termination action—on death reports with verified SSNs—without independently
verifying the accuracy of the report.

RESULTS
OF REVIEW

SSA needs
to improve its controls and procedures to ensure that (1) death alerts
are resolved in a timely and consistent manner, and (2) improper payments
are recovered after the death of a beneficiary. Because of delays in receiving
death reports from Federal and State agencies and processing reclamation actions
with Treasury, SSA is vulnerable to individuals who negotiate payments
received after the death of a beneficiary.

Based on
a random sample of 200 death alerts from July to December 1999, we
found that SSA disbursed $216,327 in payments after death. Of this amount,
SSA had not recovered $8,141 as of March 2002. Projecting these results
to our population of 65,809 death alerts, we estimate that SSA disbursed
about $71.2 million in payments after death, of which SSA was unable to
recover about $2.7 million. For calendar year 1999, we estimate that
SSA disbursed about $142.4 million in payments after death. Of this amount,
SSA had not recovered about $5.4 million as of March 2002 (see Appendix A).

RECOMMENDATIONS

We recommend
that SSA:

Modify
its automated systems to support EDR, including the on-line verification of
SSNs, processing of verified and unverified State death reports, and termination
of benefits upon receipt of verified State death reports.

Encourage
State BVS agencies to develop and implement EDR systems.

Work
with other Federal and State agencies to obtain additional funding for EDR.

Issue
a memorandum to reiterate that FOs should process death alerts as expeditiously
as possible to minimize improper payments to deceased beneficiaries.

Evaluate
the feasibility of systems modifications to (1) simultaneously issue
the "come-in" letter to the beneficiary when the death alert is
sent to the FO, and (2) automatically suspend benefits if the beneficiary
does not respond to the "come-in" letter.

Issue
a memorandum to reiterate that processing centers (PC) should follow up on
the status of reclamation actions with Treasury to ensure that payments after
death are recovered.

Encourage
PCs to maximize the use of debt collection tools available to the Agency to
recover payments after the death of a beneficiary.

AGENCY COMMENTS

SSA agreed
with six of the seven recommendations. Specifically, SSA agreed to obtain
systems support for EDR and stated that full implementation is scheduled
for September 2003. SSA is working with NAPHSIS to develop and implement
EDR systems and plans to award additional contracts to States in September 2002.
In addition, SSA is working with the National Centers for Health Statistics
to obtain sources of funding for EDR.

SSA agreed
to issue a memorandum by September 2002 to remind its employees to process all
death alerts in a timely manner and follow up on reclamation actions with Treasury
to ensure that payments after death are recovered. SSA also agreed that debt
collection tools should be used to the extent possible. Furthermore, SSA initiated
an Information Technology project to facilitate the use of authorized debt collection
tools available to the Agency.

However,
SSA disagreed with our recommendation to evaluate the feasibility of systems
modifications to (1) simultaneously issue the "come-in" letter
along with the death alert and (2) automatically suspend benefits if there
is no response to the "come-in" letter. SSA stated that the corrective
actions for other recommendations in the report should address the concerns
raised in this recommendation. SSA also provided technical comments that have
been incorporated into the final report. The full text of SSA’s comments is
included in Appendix B.

OIG RESPONSE

SSA’s planned
actions generally addressed our recommendations. Although EDR may provide
a solution for the long term, we believe SSA should evaluate other alternatives
for the short term. Therefore, we encourage SSA to reassess the feasibility
of systems modifications to further automate the death reporting process.

Our objective
was to evaluate (1) the effectiveness of the Social Security Administration’s
(SSA) controls and procedures for resolving death alerts and recovering payments
after the death of a beneficiary, and (2) the timeliness of death reporting
by State agencies.

SSA administers
the Old-Age, Survivors and Disability Insurance (OASDI) and Supplemental Security
Income (SSI) programs under titles II and XVI of the Social Security
Act (Act). The OASDI program provides benefits to retired and disabled workers,
including their dependents and survivors. The SSI program provides benefits
to financially needy individuals who are aged, blind, and/or disabled. For the
Fiscal Year (FY) ended September 30, 2000, the OASDI program provided cash
payments of $402.1 billion to 45.3 million beneficiaries. In
addition, the SSI program provided cash payments of $30.8 billion to 6.6 million
recipients.

About 2.3 million
people die in the United States each year, of whom 2.0 million are SSA
beneficiaries. The death of a beneficiary is an event that terminates the entitlement
of that individual to benefits. SSA receives reports of death from a variety
of sources, including friends and relatives of deceased individuals, funeral
homes, postal authorities, financial institutions, and Federal and State agencies.
Friends, relatives, and funeral homes report about 90 percent of deaths.
Postal authorities and financial institutions report another 5 percent
of deaths. SSA relies on computer matches with Federal and State agencies to
identify the remaining 5 percent of deaths. The following chart illustrates
the source of death reports received by SSA.

Upon receipt
of a death report, field offices (FO) and processing centers (PC) enter the
information into SSA’s automated systems. For all individuals, the death information
is recorded on the Numident, a master file that contains personal identifying
data about each individual who has been issued a Social Security number (SSN).
For individuals currently receiving benefits, the death information is recorded
on the Master Beneficiary Record (MBR) and Supplemental Security Record (SSR),
the master files that contain payment data about each individual who has received
Social Security benefits.

Death Alert,
Control, and Update System

To identify
erroneous payments to deceased individuals, SSA’s Death Alert, Control, and
Update System (DACUS) performs computer matches with death data received from
external and internal sources. The external sources include Federal agencies,
such as the Veterans Administration and the Centers for Medicare and Medicaid
Services (CMS), and State agencies, such as bureaus of vital statistics (BVS)
and social services agencies. The internal sources include SSA’s system of records,
such as the MBR, SSR, and Numident. DACUS also produces a national file of death
information, called the Death Master File.

DACUS receives
the death reports and compares the date of death to SSA’s payment records, including
the MBR and SSR. If there is no conflicting information, DACUS records the death
on the Numident. If payments have been made after death or there is conflicting
information about the date of death, DACUS generates an alert to the FO. DACUS
also generates a follow-up alert every 30 days until the initial alert
has been resolved. In addition, DACUS produces a monthly report of death alerts
over 120 days old, called the "120-day aged alert report," for
regional offices to ensure that all death alerts are resolved.

SSA’s Program
Operations Manual System (POMS) states that FOs should resolve death alerts
within 30 days to minimize incorrect payments. The FO attempts to call
the beneficiary’s residence to verify the death information. If the death is
verified, the FO terminates benefits immediately. If the individual may be alive,
the FO conducts a face-to-face interview. If the telephone contact is unsuccessful,
the FO mails a "come-in" letter to request a face-to-face interview.
For SSI recipients, the FO mails another letter which provides advance notice
of adverse action and suspends benefits after 30 days if there is no response.
For OASDI beneficiaries, the PC suspends payments after 20 days if there
is no response and terminates benefits after an additional 60 days. An
overview of the death alert process is depicted in the following chart.

Electronic
Death Registration

In September 1999,
SSA contracted with the National Association for Public Health Statistics and
Information Systems (NAPHSIS), an association of State vital records directors
and registrars, to develop standards and guidelines for a nationwide system
of electronic death registration (EDR). This system would enable SSA to
receive death reports within 5 days of death and 24 hours of receipt
in the State BVS. Under EDR, SSA verifies the SSN with the State BVS at the
beginning of the death registration process, thereby allowing the Agency to
take immediate termination action—on death reports with verified SSNs—without
independently verifying the accuracy of the report.

This system
would automate the death registration process and enable SSA to receive more
timely and accurate death reports, resulting in significant program and workyear
savings. In addition, EDR provides the infrastructure for other Federal and
State agencies that rely on such information to detect and prevent erroneous
payments to deceased individuals. Under the terms of the contract, NAPHSIS conducted
two pilot projects to determine the feasibility of (1) transmitting death
reports to SSA within 24 hours, and (2) developing a system for on-line
verification of SSNs. Both projects were completed in New Jersey.

Recovery
of Payments After Death

Upon receipt
of a death report, SSA is required to terminate benefits to the deceased individual
and recover any payments after the date of death. Since entitlement to benefits
ceases when an individual dies, these payments are defined as incorrect payments
rather than overpayments and are not subject to SSA’s normal recovery procedures.
Generally, the recovery of payments after death is the responsibility of the Department
of the Treasury (Treasury). Treasury recovers these payments from financial
institutions through a process called reclamation.

SSA initiates
the reclamation process by electronically submitting the Form SF-1184,
Unavailable Check Cancellation/Request for Stop Payment, to Treasury.
Upon receipt of the Form SF-1184, Treasury examines its records of issued
payments. If the check was issued but not negotiated, Treasury credits SSA for
the amount of the payment. If the check was negotiated, Treasury attempts to
reclaim the amount from the financial institution. Treasury credits SSA for
any funds collected from the financial institution. Treasury initiates similar
actions for payments via electronic funds transfer. If the full amount of the
payment is not recovered, Treasury provides SSA with a copy of the negotiated
check or the name of the individual who withdrew the funds from the beneficiary’s
account. Thereafter, the responsibility for collecting any outstanding amounts
shifts to SSA.

SCOPE AND
METHODOLOGY

From July
to December 1999, DACUS generated 65,809 initial death alerts for
OASDI beneficiaries under title II of the Act. Of this amount, 63,056 alerts
were for beneficiaries in current pay status, and 2,753 alerts were for
beneficiaries in terminated pay status. From this population, we selected a
random sample of 200 death alerts for our review. Although the individuals
in terminated pay status were no longer receiving benefits when the death alert
was generated, we did not exclude these individuals from our population because
they could have previously received improper payments based on erroneous dates
of death. The following chart summarizes the initial death alerts by payment
status.

To accomplish
our objectives, we:

reviewed
the applicable sections of the Act, Code of Federal Regulations, and POMS;

interviewed
SSA employees from the Offices of Program Benefits, Systems Requirements,
Systems Design and Development, Financial Policy and Operations, and
Quality Assurance and Performance Assessment;

performed
site visits at selected FOs in SSA’s Region IX and interviewed employees
responsible for processing death alerts;

obtained
electronic copies of initial death alerts generated by DACUS from July to
December 1999;

extracted
a random sample of 200 death alerts from the population; and

obtained
queries from the MBR, SSR, Numident, Payment History Update System, Modernized
Development Worksheet, and Recovery of Overpayments, Accounting, and Reporting
system.

As part
of our review, we verified the information on the death alerts against SSA’s
beneficiary and payment records. For the individuals who were deceased, we determined
the amount of payments after death and reviewed the actions taken by SSA to
recover these amounts over a period of time. In addition, we determined whether
the payments after death were disbursed before receipt of a death report, within
30 days of the initial death alert, or over 30 days after the initial
death alert.

We performed
audit work in Baltimore, Maryland, and Richmond, California, between November 2001
and April 2002. The entity audited was the Office of Program Benefits within
the Office of the Deputy Commissioner for Disability and Income Security Programs.
We conducted our audit in accordance with generally accepted government auditing
standards.

SSA needs
to improve its controls and procedures to ensure that (1) death alerts
are resolved in a timely and consistent manner, and (2) improper payments
are recovered after the death of a beneficiary. Because of delays in receiving
death reports from Federal and State agencies and processing reclamation actions
with Treasury, SSA is vulnerable to individuals who negotiate payments
received after the death of a beneficiary.

Based on
a random sample of 200 death alerts from July to December 1999, we
found that SSA disbursed $216,327 in payments after death. Of this amount,
SSA had not recovered $8,141 as of March 2002. Projecting these results
to our population of 65,809 death alerts, we estimate that SSA disbursed
about $71.2 million in payments after death, of which SSA was unable to
recover about $2.7 million. During our review, we found no evidence to
indicate that the nature and extent of death alerts in the second half of 1999
were not representatives of those in the first half of 1999. Therefore, our
estimates for calendar year (CY) 1999 are twice as much as our projections
for the second half of 1999. Accordingly, we estimate that SSA disbursed about
$142.4 million in payments after death in CY 1999, of which SSA had
not recovered about $5.4 million as of March 2002 (see Appendix A).
The results of our review are summarized below.

IMPROPER
PAYMENTS TO DECEASED BENEFICIARIES

In CY 1999,
we estimate that SSA disbursed about $86.3 million (60.6 percent)
before it received a death report (that is, between the date of death
and date of alert). This occurred because of delays in receiving death reports
from Federal and State agencies. We also estimate that SSA disbursed about $42.2 million
(29.6 percent) during the 30-day period for processing death alerts. This
occurred because of timing differences between the dates in which SSA processed
the alerts and disbursed the payments. In addition, we estimate that SSA disbursed
about $13.9 million (9.8 percent) over 30 days after death alert
was generated. This occurred because of delays in processing death alerts by
FOs. The following chart provides a breakdown of the total payments after death.

Prior to
Receipt of Death Report

Of the 200 death
alerts in our sample, 160 alerts resulted in improper payments to
deceased beneficiaries. In 40 of the 160 cases, SSA promptly received
the death reports from Federal and State agencies before any payments after
death were disbursed. However, in 120 cases, SSA did not receive the death
reports in a timely manner. As a result, these individuals received $131,184 in
payments to which they were not entitled.

Our review
disclosed that delays in receiving death reports contributed significantly to the
total payments after death. As depicted in the chart below, the elapsed time
from the date of death to the date of alert varied considerably based on
the source of the death report. For the individuals in current pay status, we
determined that the average length of time to receive death reports from Federal
agencies and State agencies was 53 and 75 days, respectively.

The death
registration process requires that hospitals, medical examiners, coroners, and
funeral homes submit reports of death to local registrars (for example, county
recorder’s offices). Each State BVS consolidates death data from local registrars
before reporting such information to SSA. This process is susceptible to errors
and delays because of the manual processing of paper records and limited systems
interface between these entities.

In September 1999,
SSA contracted with NAPHSIS to develop standards and guidelines for a nationwide
EDR system, including the on-line verification of SSNs. This system would enable
SSA to receive death reports within 5 days of death and 24 hours of
receipt in the State BVS. Under EDR, SSA verifies the SSN with the State BVS
at the beginning of the death registration process. For death reports with verified
SSNs, SSA may take immediate termination action upon receipt of the report.
For death reports with unverified SSNs, SSA must independently verify the accuracy
of the report before initiating termination action.

This system
would automate the death registration process and enable SSA to receive more
timely and accurate death reports, resulting in significant program and workyear
savings. In addition, EDR provides the infrastructure for other Federal and
State agencies that rely on such information to detect and prevent erroneous
payments to deceased individuals. These agencies include the Department of Defense,
Office of Personnel Management, Railroad Retirement Board, Veterans Administration,
and State food stamp agencies.

SSA recently
included EDR as part of its key initiative for information exchange to support
the strategic goals and objectives of the Agency. The purpose of this initiative
is to increase electronic access to information needed to administer SSA’s programs
and improve service delivery to the public. We commend SSA for its commitment
to develop, support, and implement EDR and reduce the potential for payments
after death.

However,
SSA needs to implement a number of systems modifications to realize the benefits
of EDR. For example, SSA’s automated systems are not equipped to support the
on-line verification of SSNs. Such a system is necessary for SSA to take immediate
termination action without independent verification of the death report. SSA
should also modify its title II and title XVI software programs to
automatically terminate benefits when it receives a verified State death report.
In addition, SSA should modify DACUS to differentiate between a verified and
unverified State death report.

Furthermore,
SSA needs to encourage State BVS agencies to establish EDR systems. To achieve
the projected savings from EDR, it is imperative that SSA obtain broad participation
of State BVS agencies on a nationwide basis. Unless SSA demonstrates that the
benefits of EDR outweigh its costs, State BVS agencies may be unwilling to adopt
such a system. Although SSA provided partial funding to New Hampshire and Washington, DC,
additional funding is necessary to establish EDR in the remaining States. SSA
needs to work with other Federal and State agencies to obtain funding for EDR,
especially since many of these agencies rely on death information to detect
and prevent erroneous payments to deceased individuals.

Within 30 Days
of Initial Death Alert

Of the 200 death
alerts in our sample, 160 alerts resulted in improper payments to
deceased beneficiaries. In 69 cases, SSA did not disburse any payments
after the death alert was generated. However, in 91 cases, SSA disbursed
payments within 30 days of the initial death alert. Although SSA generally
resolved the alerts in a timely manner, our review disclosed that the termination
actions were not initiated or completed until after the monthly payments had
already been disbursed. As a result, these individuals received $64,046 in
payments to which they were not entitled.

POMS states
that FOs should take prompt action to clear all death alerts, including initial
and follow-up alerts, within 30 days to minimize incorrect payments. For
the 91 cases in our sample, we commend SSA for its corrective actions to
resolve the death alerts in accordance with these time frames. However,
because of timing differences between the dates in which SSA processed the alerts
and disbursed the payments, these actions were not always sufficient to prevent
improper payments to deceased beneficiaries.

In some
instances, SSA initiated termination actions at the beginning of the 30-day
period but was unable to complete such actions before the payment for the month
was disbursed. In other instances, SSA did not initiate termination actions
until the end of the 30-day period and had already disbursed the payment
for the month. By processing these alerts as expeditiously as possible, SSA
could minimize the payments after death, thereby alleviating the workload necessary
to establish and recover improper payments.

Over 30 Days
After Initial Death Alert

Of the 200 death
alerts in our sample, 160 alerts resulted in improper payments to
deceased beneficiaries. In 142 cases, SSA resolved the death alerts in
a timely manner. However, in 18 cases, SSA did not take prompt corrective
action to resolve the alerts within 30 days. As depicted in the chart below,
the amount of time required to resolve the death alerts range from 1 to 4 months.
During this period, these individuals remained in current pay status until the
termination actions were subsequently processed. As a result, these individuals
received $21,097 in payments to which they were not entitled.

SSA’s procedures
state that FOs should resolve death alerts within 30 days to minimize incorrect
payments. Specifically, POMS states that FOs should initially attempt one telephone
contact to the beneficiary’s residence. If the telephone contact is unsuccessful,
the FO should mail a "come-in" letter to request a face-to-face interview.
If the beneficiary does not respond within 20 days, the FO should suspend
benefits. POMS requires FOs to obtain a death certificate only when the beneficiary
is alleged to be alive.

However,
our review disclosed that FOs were not fully aware of, and did not always comply
with, the applicable procedures for resolving death alerts. For example, two FOs
informed us that they initially contacted the local registrar rather than the
beneficiary’s residence to resolve the alert. In fact, the FOs usually did not
contact the beneficiary’s residence at all. In addition, two FOs informed
us that they did not suspend benefits after 20 days if there was no response
to the "come-in" letter. Instead, the FOs allowed the beneficiaries
to remain in current pay status.

Under current
procedures, the FO mails the "come-in" letter only after DACUS generates
the death alert and the FO contacts the beneficiary’s residence. The FO suspends
benefits only after the beneficiary does not respond to the "come-in"
letter within 20 days. During our review, we noted that these actions may
require several months to complete, especially if the FO does not process the
death alert, contact the beneficiary, mail the "come-in" letter, and/or
suspend benefits in a timely manner.

Although
EDR may provide a solution for the long term, we believe that SSA needs to evaluate
other alternatives for the short term. SSA employees informed us that systems
modifications could reduce the potential for errors and delays. For example,
SSA could modify its automated systems to simultaneously issue the "come-in"
letter to the beneficiary along with the death alert to the FO. In addition,
SSA could modify its automated systems to automatically suspend benefits
after 20 days if there is no response to the "come-in" letter.
Such modifications should improve the death reporting system and prevent payments
after the death of a beneficiary.

IMPROPER
PAYMENTS NOT RECOVERED

Of the 200 death
alerts in our sample, 160 alerts resulted in improper payments to
deceased beneficiaries. In 154 cases, SSA subsequently recovered the full
amount of payments owed to the Agency. However, in six cases, SSA did not recover
$8,141 in payments after death. As of March 2002, our review disclosed
that SSA made partial recoveries in four cases and no recoveries in two cases.
These payments remained outstanding for at least 27 months after the date
of death. The recovery of payments after death is summarized in the following
chart.

Most payments
after death are incorrect payments. For these cases, SSA electronically submits
the Form SF-1184 to Treasury. Upon receipt of the Form SF-1184, Treasury
attempts to reclaim payments from financial institutions. If the full amount
of the payment is not recovered, Treasury provides SSA with the name of the
individual who withdrew the funds from the beneficiary’s account. Thereafter,
the responsibility for collecting any outstanding amounts shifts to SSA. Moreover,
some payments after death are legally-defined overpayments (for example, payments
to representative payees who receive benefits on behalf of deceased beneficiaries).
For these cases, SSA attempts to obtain repayment or adjust current benefits
to collect amounts owed to the Agency.

In four
of the six cases, Treasury was responsible for recovering the incorrect payments
from the financial institutions. In addition, SSA was responsible for recovering
any outstanding amounts from the individuals who withdrew the funds from the
beneficiary’s account. However, because of delays in processing reclamation
actions with Treasury, SSA was unable to recover these payments. In some instances,
PCs did not follow up on the Form SF-1184 in a timely manner. In other
instances, PCs attempted to follow up but discontinued such efforts over a period
of time.

In two of
the six cases, SSA was responsible for recovering the overpayments from the
representative payees. However, because PCs did not use the debt collection
tools available to the Agency, SSA was unable to recover these payments. In
one instance, SSA contacted the representative payee but did not pursue other
tools to collect the debt. In another instance, SSA established the overpayment
but did not withhold a retroactive check to recover the amounts owed. To prevent
future occurrences of similar problems, PCs should follow up on the status of
reclamation actions with Treasury to ensure that payments after death are recovered.

The Debt
Collection Improvement Act of 1996 provided SSA with additional tools to maximize
the collection of delinquent debts owed to the Agency. However, the General
Accounting Office previously reported that SSA has not effectively used a number
of debt collection tools, including tax refund offsets, administrative offsets,
credit bureau reporting, collection agencies, interest and penalties, and administrative
wage garnishment. As a result, SSA did not recover as much in overpayments as
it could have. We believe that PCs should maximize the use of these debt collection
tools to recover payments after the death of a beneficiary.

Based on
a random sample of 200 death alerts from July to December 1999, we
found that SSA disbursed $216,327 in payments after death. Of this amount,
SSA had not recovered $8,141 as of March 2002. Projecting these results
to our population of 65,809 death alerts, we estimate that SSA disbursed
about $71.2 million in payments after death, of which SSA was unable to
recover about $2.7 million. For CY 1999, we estimate that SSA disbursed
about $142.4 million in payments after death. Of this amount, SSA had not
recovered about $5.4 million as of March 2002 (see Appendix A).

Although
SSA has undertaken a number of initiatives to improve its death reporting system,
we believe that actions are necessary to strengthen program integrity and deter
fraud, waste, and abuse. These actions should reduce the potential for errors and
delays in receiving death reports, processing death alerts, and recovering payments
after death. Therefore, we recommend that SSA:

Modify
its automated systems to support EDR, including the on-line verification of
SSNs, processing of verified and unverified State death reports, and termination
of benefits upon receipt of verified State death reports.

Encourage
State BVS agencies to develop and implement EDR systems.

Work
with other Federal and State agencies to obtain additional funding for EDR.

Issue
a memorandum to reiterate that FOs should process death alerts as expeditiously
as possible to minimize improper payments to deceased beneficiaries.

Evaluate
the feasibility of systems modifications to (1) simultaneously issue
the "come-in" letter to the beneficiary when the death alert is
sent to the FO, and (2) automatically suspend benefits if the beneficiary
does not respond to the "come-in" letter.

Issue
a memorandum to reiterate that PCs should follow up on the status of reclamation
actions with Treasury to ensure that payments after death are recovered.

Encourage
PCs to maximize the use of debt collection tools available to the Agency to
recover payments after the death of a beneficiary.

AGENCY COMMENTS

In its response,
SSA agreed with six of the seven recommendations. Specifically, SSA agreed
to obtain systems support for EDR and stated that full implementation is scheduled
for September 2003. SSA is working with NAPHSIS to develop and implement
EDR systems and plans to award additional contracts to States in September 2002.
In addition, SSA is working with the National Centers for Health Statistics
to obtain sources of funding for EDR.

By September 2002,
SSA agreed to issue a memorandum to remind its employees to process all death
alerts in a timely manner and follow up on reclamation actions with Treasury
to ensure that payments after death are recovered. SSA also agreed that debt
collection tools should be used to the extent possible. Furthermore, SSA initiated
an Information Technology project to facilitate the use of authorized debt collection
tools available to the Agency.

However,
SSA disagreed with our recommendation to evaluate the feasibility of systems
modifications to (1) simultaneously issue the "come-in" letter
along with the death alert, and (2) automatically suspend benefits if there
is no response to the "come-in" letter. SSA stated that the corrective
actions for other recommendations in the report should address the concerns
raised in this recommendation. SSA also provided technical comments that have
been incorporated into the final report. The text of SSA’s comments is included
in Appendix B.

OIG RESPONSE

SSA’s planned
actions generally addressed our recommendations. Although EDR may provide
a solution for the long term, we believe that SSA should evaluate other alternatives
for the short term. Therefore, we encourage SSA to reassess the feasibility
of systems modifications to further automate the death reporting process.

We obtained
electronic copies of the initial death alerts generated by the Social Security Administration’s
(SSA) Death Alert, Control, and Update System from July to December 1999.
For the beneficiaries who were deceased, we determined the amount of payments
after death and reviewed the actions taken by SSA to recover these amounts
over a period of time. In addition, we determined whether the payments after
death were disbursed before receipt of a death report, within 30 days of
the initial death alert, or over 30 days after the initial death alert.

Based on
a random sample of 200 death alerts from July to December 1999, we
found that SSA disbursed $131,184 before it received a death report (that
is, between the date of death and date of alert). In addition, SSA disbursed
$64,046 during the 30-day period for processing alerts and $21,097 over
30 days after the death alert was generated. By adding these amounts, we
found that SSA disbursed $216,327 in payments after the death of a beneficiary.
Of this amount, SSA had not recovered $8,141 as of March 2002.

Projecting
these results to our population of 65,809 death alerts, we estimate that
SSA disbursed about $43.2 million before it received a death report, $21.1 million
during the 30-day period for processing alerts, and $6.9 million over 30 days
after the death alert was generated. By adding these amounts, we estimate that
SSA disbursed about $71.2 million in payments after death from July to
December 1999. Of this amount, we estimate that SSA had not recovered
about $2.7 million as of March 2002.

During our
review, we found no evidence to indicate that the nature and extent of death
alerts in the second half of 1999 were not representative of those in the first
half of 1999. Therefore, our estimates for calendar year (CY) 1999 are
twice as much as our projections for the second half of 1999. Accordingly, we
estimate that SSA disbursed about $86.3 million before it received a death
report, $42.2 million during the 30-day period for processing alerts, and
$13.9 million over 30 days after the death alert was generated.
By adding these amounts, we estimate that SSA disbursed about $142.4 million
in payments after death in CY 1999. Of this amount, we estimate that SSA
had not recovered about $5.4 million as of March 2002. The following
tables provide the details of our sampling results and statistical projections.

Table
1 – Incorrect Payments Prior to Receipt of Death Report

Description

Error
Count

Error
Dollars

Sample

120

$131,184

Point
Estimate

39,485

43,165,604

Lower
Limit

35,521

35,025,650

Upper
Limit

43,302

51,305,557

Annual
Estimate

78,970

$86,331,208

Table
2 – Incorrect Payments Within 30 Days of Initial Death Alert

Description

Error
Count

Error
Dollars

Sample

91

$64,046

Point
Estimate

29,943

21,074,016

Lower
Limit

26,025

17,971,188

Upper
Limit

33,928

24,176,844

Annual
Estimate

59,886

$42,148,032

Table
3 – Incorrect Payments Over 30 Days After Initial Death Alert

Description

Error
Count

Error
Dollars

Sample

18

$21,097

Point
Estimate

5,923

6,941,862

Lower
Limit

3,883

3,634,497

Upper
Limit

8,587

10,249,228

Annual
Estimate

11,846

$13,883,724

Table
4 – Incorrect Payments Not Recovered by SSA

Description

Error
Count

Error
Dollars

Sample

6

$8,141

Point
Estimate

1,974

2,678,755

Lower
Limit

866

694,781

Upper
Limit

3,838

4,662,730

Annual
Estimate

3,948

$5,357,510

The point
estimate represents the statistical projection of the sample results to the
population for the death alerts generated during the 6-month period from July 1999
to December 1999. All statistical projections are reported at the 90 percent
confidence level.

Appendix
B

Agency
Comments

MEMORANDUM

Date:

September
3, 2002 Refer

Refer
To: S1J-3

To:

James
G. Huse, Jr.Inspector
General

From:

Larry
Dye Chief
of Staff

Subject:

Office
of the Inspector General Draft Report, "Effectiveness of the Social
Security Administration's Death Termination Process" (A-09-02-22023)—INFORMATION

We appreciate
OIG's efforts in conducting this review. Our comments on the report content
and recommendations are attached.

Please let
us know if we can be of further assistance. Staff questions can be referred
to Dan
Sweeney on extension 51957.

SSA Response

COMMENTS
ON THE OFFICE OF THE INSPECTOR GENERAL (OIG) DRAFT REPORT, "EFFECTIVENESS
OF THE SOCIAL SECURITY ADMINISTRATION'S DEATH TERMINATION PROCESS" (A-09-02-22023)

Recommendation
1

Modify the
Social Security Administration’s (SSA) automated systems to support Electronic
Death Registration (EDR), including the on-line verification of Social Security
numbers (SSN), processing of verified and unverified State death reports, and
termination of benefits upon receipt of verified State death reports.

Comment

We will
continue to work on systems support for EDR. EDR is an initiative under eVital,
one of 24 governmentwide eGov initiatives. As noted in the report, SSA has been
engaged in the EDR project since 1999. The Internet Verification "front-end"
phase is scheduled for implementation in December 2002. The "backend" Planning
and Analysis phase has already been completed and work is now being conducted
on the Requirements phase. We expect full implementation by the end of September
2003, at which time SSA will accept verified EDR records for immediate termination.

Recommendation
2

Encourage
State Bureau of Vital Statistics agencies to develop and implement EDR systems.

Comment

As indicated
in the report, SSA is working with the National Association for Public Health
Statistics and Information Systems (NAPHSIS) and the States to develop and implement
EDR Systems. SSA began the nationwide rollout of EDR by awarding contracts to
the District of Columbia and New Hampshire in September 2001.

In September
2001, SSA also awarded a contract to NAPHSIS to 1) develop a comprehensive educational
plan for distribution to the various participants; 2) arrange marketing sessions
with various Federal agencies that use death data to explain the value of more
timely and accurate data and the program savings that could be realized; 3)
serve as a consultant to States that are ready to implement EDR; and 4) serve
as a technical advisor to States that are not ready to implement, providing
advice and consulting services.

SSA plans
to award additional State contracts in September 2002.

Recommendation
3

Work with
other Federal and State agencies to obtain additional funding for EDR.

Comment

The recommendation
is already a part of our development and expansion of EDR as SSA continues to
partner with National Centers for Health Statistics to encourage other sources
of funding.

Recommendation
4

Issue a
memorandum to reiterate that field offices (FO) should process death alerts
as expeditiously as possible to minimize improper payments to deceased beneficiaries.

Comment

We agree
and will issue a memorandum by the end of September 2002 reminding the FOs to
expeditiously process all death alerts received.

Recommendation
5

Evaluate
the feasibility of systems modifications to 1) simultaneously issue the
"come-in" letter to the beneficiary when the death alert is sent to
the FO, and 2) automatically suspend benefits if the beneficiary does not
respond to the "come-in" letter.

Comment

We disagree.
We believe that expansion of EDR, systems enhancements and the reminder to FOs
noted above will address the concerns expressed in this recommendation. We also
believe that further study by OIG on the recommendation may be needed to consider
the workload impact of automated letters. FOs receive death reports from a variety
of sources and confusion may result if a "come-in" letter is received
following other actions that may have been taken by FOs.

Recommendation
6

Issue a
memorandum to reiterate that processing centers (PC) should follow up on the
status of reclamation actions with Treasury to ensure that payments after death
are recovered.

Comment

We agree
and will issue a memorandum by the end of September 2002 reminding the PCs to
follow up on the status of reclamation actions with Treasury to ensure that
payments after death are recovered.

Recommendation
7

Encourage
PCs to maximize the use of debt collection tools available to the Agency to
recover payments after the death of a beneficiary.

Comment

We agree
in principle that debt collection tools (tax refund offset, administrative offset,
credit bureau reporting and any subsequent tools) should be used whenever the
criteria for their use are met. However, it should be noted that SSA uses its
automated systems to select the debtors for inclusion in the debt collection
programs: the PCs do not engage in any selection actions for the debt collection
tools.

SSA has
initiated an Information Technology project called Non-Entitled Debtors that
will enable us to use authorized debt collection tools against representative
payees of deceased beneficiaries and other debtors who are liable for benefit
payments made after the death of beneficiaries. Scheduling for the project remains
to be completed.

For additional
copies of this report, please visit our web site at www.socialsecurity.gov/oig
or contact the Office of the Inspector General’s Public Affairs Specialist at
(410) 966-1375. Refer to Common Identification Number A-09-02-22023.

Overview
of the Office of the Inspector General

Office
of Audit

The Office
of Audit (OA) conducts comprehensive financial and performance audits of the
Social Security Administration’s (SSA) programs and makes recommendations
to ensure that program objectives are achieved effectively and efficiently.
Financial audits, required by the Chief Financial Officers' Act of 1990, assess
whether SSA’s financial statements fairly present the Agency’s financial position,
results of operations, and cash flow. Performance audits review the economy,
efficiency, and effectiveness of SSA’s programs. OA also conducts short-term
management and program evaluations focused on issues of concern to SSA, Congress,
and the general public. Evaluations often focus on identifying and recommending
ways to prevent and minimize program fraud and inefficiency, rather than detecting
problems after they occur.

Office
of Executive Operations

OEO supports
the OIG by providing information resource management; systems security; and
the coordination of budget, procurement, telecommunications, facilities and
equipment, and human resources. In addition, this office is the focal point
for the OIG’s strategic planning function and the development and implementation
of performance measures required by the Government Performance and Results
Act. OEO is also responsible for performing internal reviews to ensure that
OIG offices nationwide hold themselves to the same rigorous standards that we
expect from SSA, as well as conducting investigations of OIG employees, when
necessary. Finally, OEO administers OIG’s public affairs, media, and interagency
activities, coordinates responses to Congressional requests for information,
and also communicates OIG’s planned and current activities and their results
to the Commissioner and Congress.

Office
of Investigations

The Office
of Investigations (OI) conducts and coordinates investigative activity related
to fraud, waste, abuse, and mismanagement of SSA programs and operations. This
includes wrongdoing by applicants, beneficiaries, contractors, physicians, interpreters,
representative payees, third parties, and by SSA employees in the performance
of their duties. OI also conducts joint investigations with other Federal, State,
and local law enforcement agencies.

Counsel
to the Inspector General

The Counsel
to the Inspector General provides legal advice and counsel to the Inspector
General on various matters, including: 1) statutes, regulations, legislation,
and policy directives governing the administration of SSA’s programs; 2)
investigative procedures and techniques; and 3) legal implications and conclusions
to be drawn from audit and investigative material produced by the OIG. The Counsel’s
office also administers the civil monetary penalty program.